Giles Coghlan LLB, Lth, MA
Financial Source
The market communicates its mood not only through price but also through volume. This is one message that you really need to pay attention to as volume is a confirmation or a contradiction of price, particularly at certain times.
The message of high volume
The best way to understand high volume is to think of high volume like SOMEONE IS SHOUTING. High volume is like using CAPS LOCK when you are typing. The simple relationship between price and volume is like this:
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Rising price, rising volume = Increasing demand (bullish).
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Rising price, falling volume = Decreasing demand (bearish).
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Falling price, rising volume = Increasing supply (bearish).
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Falling price, falling volume = Decreasing supply (bullish).
How to view volume?
There are many different ways to view volume on a chart, but one of the simplest ways is to just have volume displayed under the price. The interpretation of price is then complimented by volume. Is volume rising or falling with the price? Is this breakout supported with high volume? Remember, volume validates price and a big fundamental shift in the markets accompanied by high volume is a huge vote of confidence. So, if you have not been consulting volume when trading stocks you have been missing out on a key piece of analysis. If you look at the chart below you can see the volume plotted underneath the price.
There are other ways to have volume displayed like using volume profile (very useful) and equivolume charts, but if you have not looked at volume before the simplest way is to look at the example seen here and start with that.
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Editors’ Picks
EUR/USD turns negative near 1.1850
EUR/USD has given up its earlier intraday gains on Thursday and is now struggling to hold above the 1.1850 area. The US Dollar is finding renewed support from a pick-up in risk aversion, while fresh market chatter suggesting Russia could be considering a return to the US Dollar system is also lending the Greenback an extra boost.
GBP/USD change course, nears 1.3600
GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.
USD/JPY consolidates around 153.00 favoured by lower Fed easing bets
USD/JPY steadies around 153.00 after hitting two-week lows at 152.25. A strong US Nonfarm Payrolls report provided some support for the US Dollar on Wednesday. The Yen remains on track for a 2.6% weekly rally, boosted by Takaichi's victory at Sunday's elections.
Editors’ Picks
Gold plunges on sudden US Dollar demand
Gold drops markedly on Thursday, challenging the $4,900 mark per troy ounce following a firm bounce in the US Dollar and amid a steep sell-off on Wall Street, with losses led by the tech and housing sectors.
EUR/USD turns negative near 1.1850
EUR/USD has given up its earlier intraday gains on Thursday and is now struggling to hold above the 1.1850 area. The US Dollar is finding renewed support from a pick-up in risk aversion, while fresh market chatter suggesting Russia could be considering a return to the US Dollar system is also lending the Greenback an extra boost.
GBP/USD change course, nears 1.3600
GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.
LayerZero Price Forecast: ZRO steadies as markets digest Zero blockchain announcement
LayerZero (ZRO) trades above $2.00 at press time on Thursday, holding steady after a 17% rebound the previous day, which aligned with the public announcement of the Zero blockchain and Cathie Wood joining the advisory board.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
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